Afghan government to shun U.S. talks with Taliban

Revived Afghan peace talks hit their first roadblock on Wednesday, a day after they were announced, as Afghan President Hamid Karzai said his government would not join U.S. talks with the Taliban and would halt negotiations with Washington on a post-2014 troop pact.

The United States and the Taliban had announced on Tuesday that officials from both sides will meet in Doha, the capital of Qatar, in coming days, in a step forward for a stuttering peace process after 12 years of bloody and costly war between U.S.-led forces and the insurgents.

But the precise timing of the negotiations was uncertain on Wednesday as U.S. officials worked furiously to keep the nascent peace talks on track.

Officials of Karzai's government, angered by the opening of a Taliban political office in Doha on Tuesday, said the United States had violated assurances it would not give official status to the insurgents.

"As long as the peace process is not Afghan-led, the High Peace Council will not participate in the talks in Qatar," Karzai said in a statement, referring to a body he set up in 2010 to seek a negotiated peace with the Taliban.

 

Karzai's objections appeared to focus on the way the Taliban unveiled the office in Doha, which suggested the Islamic movement would use it as an official embassy or even a base for a government-in-exile.

When Taliban envoys appeared at the building on Tuesday, it was decorated with a banner referring to the Islamic Emirate of Afghanistan, the name the Taliban used during its 1996-2001 rule of the country.

Karzai said the office's opening showed the United States had failed to honor promises made to the Afghan state about its role.

"The U.S. officials told us the office will be used to move peace talks forward, but not to give them an identity," an Afghan official said. "The Taliban's flag and the banner of the Islamic Emirate was something we did not expect."

U.S. and Afghan officials said U.S. Secretary of State John Kerry spoke with Karzai on Tuesday night and again on Wednesday morning in an effort to defuse the controversy.

Kerry told the Afghan leader that "the government of Qatar has taken steps today to ensure that the political office is in compliance with the conditions established by the government of Qatar for its operations," State Department spokeswoman Jen Psaki said.

Qatar "has had the sign with the incorrect name in front of the door taken down," Psaki said.

U.S. Defense Secretary Chuck Hagel, answering questions after an address on Wednesday at the University of Nebraska, said the involvement of Karzai's government would be essential for future talks.

Without specifying a time frame, Hagel added: "Any kind of a next set of meetings that would involve the United States - certainly we're a long way from any negotiations - would require the Taliban to agree to certain things. That can't be done, won't be done, without President Karzai and the people of Afghanistan."

Meanwhile, U.S.-Taliban talks that U.S. officials had suggested would take place in Doha on Thursday appeared to be delayed by at least a few days.

A senior U.S. official, speaking on condition of anonymity, said the initial meeting was likely to be held in the "next few days," but would not be more specific.

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The dispute over the Taliban office after months of behind-the-scenes diplomacy to restart the peace talks underscored what U.S. officials say is a void of trust between Karzai and the Taliban, who have been waging an insurgency to overthrow his government and oust foreign troops.

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Fighting continued in the war-ravaged nation. Four U.S. soldiers were killed in a rocket attack on the heavily fortified Bagram base near Kabul late on Tuesday, international military officials said.

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TROOP TALKS SUSPENDED

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Karzai's office also said it was suspending the talks on a post-2014 security pact with the United States.

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Negotiations on the Bilateral Security Agreement began this year and, if completed, will set out how many U.S. bases and soldiers will remain in Afghanistan once NATO ends combat operations by December 2014.

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"In view of the contradiction between acts and the statements made by the United States of America in regard to the peace process, the Afghan government suspended the negotiations," Karzai's office said in a statement.

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"The suspension of the talks will continue until there is clarity from the United States," the Afghan official added.

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The announcement of the diplomatic moves on Tuesday had raised hopes that Karzai's government and the Taliban might enter their first-ever direct negotiations on Afghanistan's future, with Washington acting as a broker and Pakistan as a major outside player.

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On Tuesday, Karzai had said his government would also send a team to Qatar but added the talks should quickly be moved to Afghanistan.

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The Taliban has until now refused talks with Kabul, calling Karzai and his government puppets of the West. But a senior Afghan official said earlier the Taliban were now willing to consider talks with the government.

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It remained to be seen how long Karzai's boycott of the peace process - of which he is said to be deeply skeptical - will last. He has at times staked out stark positions publicly, only to reverse himself later.

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A Taliban spokesman in Qatar on Wednesday confirmed the insurgency movement would attend a meeting with U.S. officials, but gave no time for the talks. The spokesman, Mohammed Naeem, told Reuters that no Afghan government officials would be at that meeting.

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Underlining the importance of the process to the United States, the State Department said Kerry would travel to Doha for meetings with senior Qatari officials on Friday and Saturday. But U.S. officials said he would not meet with Taliban representatives.

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SIGN OF OPTIMISM

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The Taliban has said it wants a political solution that would bring about a just government and end foreign occupation of Afghanistan.

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The first signs of optimism in peace efforts for many months come as the U.S.-led war effort reaches a critical juncture. The NATO command in Kabul on Tuesday handed over lead security responsibility to Afghan government forces across the country.

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U.S. officials said that in the talks in Doha, the United States would stick to its insistence that the Taliban break ties with al Qaeda, end violence, and accept the Afghan constitution, including protection for women and minorities.

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Asked if the Taliban would renounce al Qaeda, which Washington considers a terrorist organization, Naeem, the Taliban spokesman, said there was no clear definition of terrorism.

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"Once we define what terrorism is, for the Islamic emirate of Afghanistan (the Taliban), (we) will be able to say what is acceptable and what is not acceptable," he said.

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The Taliban is expected to demand the return of former senior commanders now detained at the U.S. military prison at Guantanamo Bay, Cuba, a move opposed by many in the U.S. Congress, as well as the departure of all foreign troops.

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The United States wants the return of the only known U.S. prisoner of war from the conflict, Sergeant Bowe Bergdahl, who is believed to be held by the Taliban.

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(Additional reporting by Miriam Arghandiwal, Jeff Mason and Roberta Rampton in Berlin, Amena Bakr in Dubai and Phil Stewart in Washington; Writing by Dylan Welch and Warren Strobel; Editing by Robert Birsel and Peter Cooney)

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North Carolina governor signs law aimed at restarting executions

North Carolina's governor, hoping to resume executions in his state, on Wednesday signed the repeal of a law that has allowed death row inmates to seek a reduced sentence if they could prove racial bias affected their punishment.

The Racial Justice Act, the only law of its kind in the United States, had led to four inmates getting their sentences changed to life in prison without parole after taking effect in 2009.

Supporters said the historic measure addressed the state's long record of racial injustice in its capital punishment system, while critics said it caused unnecessary costs and delays after nearly all death-row inmates, including whites, sought relief under the act.

Governor Pat McCrory, a Republican, said repealing the law would remove the "procedural roadblocks" that had kept North Carolina from executing anyone since 2006 despite there being 152 people on death row.

 

"The state's district attorneys are nearly unanimous in their bipartisan conclusion that the Racial Justice Act created a judicial loophole to avoid the death penalty and not a path to justice," McCrory said.

Republican lawmakers gutted the Racial Justice Act, passed when Democrats controlled the legislature and governor's office, after winning the majority in the state's General Assembly.

The American Civil Liberties Union of North Carolina criticized the repeal on Wednesday and accused state leaders of ignoring widespread evidence of systemic racial bias.

Statistics show that of the 152 people on death row in North Carolina, 80 are black, 62 are white and the remainder fall into other racial categories in a state where African Americans overall make up around a fifth of the population.

The repeal applies retroactively to cases with pending Racial Justice Act claims, a factor certain to result in additional legal wrangling, one death penalty expert said.

"To me, it's a violation of due process," said Mark Rabil, director of Wake Forest University law school's Innocence and Justice Clinic in Winston-Salem. "I don't really know what the legislature thinks they've done with our money other than buy a lot more litigation."

(Reporting by Colleen Jenkins; Editing by Cynthia Johnston and David Brunnstrom)

Facebook has never been stronger since IPO, Sandberg says

A year after Facebook Inc's fumbled IPO, Wall Street remains slow to recognize what Chief Operating Officer Sheryl Sandberg argues has been an across-the-board improvement in its business.

Facebook's ability to deliver ads to mobile phones, improvements in measuring the effectiveness of its ads and increasing user engagement have all put the world's largest social network in a better position than before the IPO, Sandberg told the Reuters Global Technology Summit on Wednesday.

 

"When I look back at the last year since we went public, I believe we are unequivocally a much stronger company today than we were on literally any metric I can think of," Sandberg said at the Reuters Global Technology Summit on Wednesday.

Facebook became the first U.S. technology company to debut with a value of more than $100 billion, in May 2012. Its shares have lost almost 40 percent of their value since.

"I can't speak to the stock price but I do feel strongly that we are a better positioned, stronger company than we were a year ago," she said.

With 1.1 billion users, Facebook is one of the Web's most popular destinations for consumers and advertisers. But growth in the company's revenue has slowed sharply from two years ago and some investors fret that a new crop of mobile apps aimed at younger users could chip away at Facebook's hold on consumers.

Analysts also wonder if the company's depressed share price could dampen morale and hamper its ability to attract talent in Silicon Valley's ultra-competitive talent arena.

"I don't think it's actually had a huge impact," the ex-Google Inc executive said, adding that while there had been some worries in the company about it, she was less worried as she had been through it before.

The cool investor reception to Facebook and other recent consumer dotcom debutantes from Groupon to Zynga has helped chill the Silicon Valley IPO train.

"If you miss in the first six months of being a public company, you're in the penalty box for a very long time," Sequoia partner Roelof Botha said at a panel about the fate of Silicon Valley public offerings.

"If you beat too much, you're an idiot because you should have forecast higher.

OLD AND NEW

Under co-founder and CEO Mark Zuckerberg, Facebook's new mission is to carve out a dominant position in smartphones and tablets to keep up with shifting consumer habits.

The company's mobile ads, which appear directly in users' newsfeeds and now account for 30 percent of Facebook's overall ad revenue, command higher prices than its previous PC ads and are tougher for competitors to replicate, Sandberg said.

It has recently introduced new features that have been popularized on rival service Twitter, such as verified user accounts and "hashtags," which make it easier for users to follow activity on the social network.

Within the last year, Facebook made its largest acquisition ever, paying about $700 million for Instagram. Sandberg said the company was in no hurry to generate revenue from the mobile photo-sharing app.

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Facebook will at some point monetize the popular picture-postings service, Sandberg said. But for the near term "we all think it makes a lot of sense for Instagram to be focused on growth" in users.

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Another untapped opportunity is China. Facebook remained interested in offering its service in the world's largest Internet market, where the social network is banned.

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"It's an ongoing conversation with the government. At the end of the day it's their choice," she said. Sitting on the sidelines too long did not mean Facebook would cede the market to local competitors, she insisted.

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"We were not the first entrants in our space to any market I'm aware of. There were markets like Brazil where Orkut had huge penetration, we're now over 80 percent penetrated into the Internet population," Sandberg said.

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Sandberg, 43, joined Facebook as chief operating officer in 2008, overseeing business operations and transforming the fast-growing social network into a multi-billion company, while Zuckerberg focused on product strategy.

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A former Google sales executive who also served as chief of staff to former U.S. Treasury Secretary Lawrence Summers, Sandberg is credited with bringing valuable business experience and organizational discipline to the company.

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With her new book, Lean In, currently the No.2 bestseller in the New York Times hardcover non-fiction list, some wonder whether Sandberg might be ready to take on a new challenge, perhaps in the world of politics.

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She dismissed the notion of political aspirations, noting that she has already been in government and had no plans to leave Facebook.

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Follow Reuters Summits on Twitter @Reuters_Summits

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(For other news from Reuters Global Technology Summit, click on www.reuters.com/summit/Tech13)

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(Editing by Edwin Chan, Ed Tobin and Edwina Gibbs)

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UPDATE 2-Storm Barry heads for Mexico Gulf coast oil installations

Tropical Storm Barry, the second of the Atlantic hurricane season, strengthened as it churned toward Mexico on Wednesday, threatening to bring heavy rains to oil and power installations near the country's Gulf coast.

The Minatitlan oil refinery of state oil monopoly Pemex and the Laguna Verde nuclear power plant, both in Veracruz state, are being monitored closely, said Noemi Zoila, head of the local government's emergency services.

Mexico's three major Gulf coast oil export terminals - Coatzacoalcos, Cayo Arcas and Dos Bocas - closed on Wednesday because of heavy rain and reduced visibility.

 

Barry was about 40 miles (60 km) east-northeast of the port of Veracruz, moving at 6 miles per hour (9 kph) as it approached land, the U.S. National Hurricane Center said.

The storm's maximum sustained winds were 45 mph (75 kph), the center added, and a tropical storm warning was in effect along a costal stretch from Tuxpan to Punta El Lagarto.

The biggest impact was expected to be felt in southern and central parts of Veracruz state late on Wednesday and early on Thursday, said local emergency services spokesman Manuel Escalera.

Escalera added that the storm could cross Pemex's installations as well as hydroelectric dams. He said the state was prepared to offer temporary shelter to up to 500,000 people, and that all public schools would be closed on Thursday as a precautionary measure.

The first tropical storm of the 2013 Atlantic Hurricane season, Andrea, formed in the Gulf of Mexico on June 5 and moved toward Florida, Georgia and North Carolina.

China jails 19 Uighurs for religious extremism

Courts in China's far western region of Xinjiang have sentenced 19 ethnic Uighurs to up to six years in jail for promoting racial hatred and religious extremism online, in the latest crackdown on what China sees as violent separatists.

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All but one of those jailed were from the heavily Uighur southern part of Xinjiang, including eight from the old Silk Road city of Kashgar, the official Legal Daily reported on its website.

 

Many Uighurs, a Turkic-speaking Muslim people who call energy-rich Xinjiang home, chafe at Chinese government restrictions on their culture, language and religion. class="mandelbrot_refrag">China says it grants them wide-ranging freedoms.

In one of the cases, the suspect went on illegal websites to download material which "whipped up religious fervor and preached 'holy war'" and "whipped up ethnic enmity", the Legal Daily said in its report late on Wednesday.

"This created a despicable effect on society," the newspaper said, citing the court ruling.

Another suspect was jailed for spreading materials from overseas via the Internet which "advocate religious extremism and terrorism", the newspaper added.

While the report did not specify the ethnicity of those jailed, their names and the location of the courts where they were sentenced indicated they were all Uighurs.

China accuses armed Uighur groups of having links to Central Asian and Pakistani Islamist militants, and of carrying out attacks to establish an independent state called East Turkistan.

Many rights groups say China overplays the threat posed to justify its tough controls in Xinjiang.

The region, which lies strategically on the borders of Central Asia, India and Pakistan, sees frequent outbreaks of ethnic violence.

In April, 21 people were killed in clashes near Kashgar, the deadliest unrest since July 2009, when nearly 200 people were killed in riots in the Xinjiang capital of Urumqi.

(Reporting by Ben Blanchard; Editing by Robert Birsel)

Lawmaker, university spar over 'control' of Chinese dissident in U.S.

A U.S. congressman who has been blind Chinese dissident Chen Guangcheng's main champion in Washington said people working for New York University have tried to keep him from meeting Chen, barging into a meeting on Capitol Hill and pulling Chen out on one occasion.

U.S. Representative Chris Smith, an outspoken supporter of Chinese dissidents since the 1980s, described repeated instances of various people he says were from NYU interfering in his attempts to meet with Chen.

NYU spokesman John Beckman in an email vigorously disputed the assertion that its representatives may have been involved in improper interference or control of Chen during his meetings with lawmakers and others, stressing that anyone present was there to help Chen at his request.

 

The encounters took place both in Washington and at NYU. Chen has been a research fellow at NYU Law School since he flew to the United States in May 2012 after he escaped from house arrest in his village in Shandong province and took refuge in the U.S. Embassy in Beijing.

Chen has accused NYU of asking him to leave because of "unrelenting pressure" from China. NYU denies this, saying he is leaving because his fellowship for one year is ending.

Some of Chen's supporters suggest NYU fears his strident public criticism of China will complicate the university's plans to build a campus in Shanghai - an assertion NYU has also dismissed.

"Every time I've met with him, except once, only because I insisted, there was always somebody from the university - I don't know who they are or who they are reporting to - taking notes on everything," Smith, a New Jersey Republican, said in an interview.

The one meeting Smith had without Chen being escorted was shortly after Chen received a human rights award on Capitol Hill on January 29. It took place in Smith's office in the Rayburn Office Building but it was interrupted and halted before Smith was ready, he said.

A lady who appeared to be Chinese "insisted on translating, and I said 'with all due respect, I want a little private time with the great Chen Guangcheng', and I closed the door. She starts calling his phone over and over and over again, like four or five times," said Smith.

"And finally after a half hour, because I had asked for a half-hour meeting, my door flies open and she says ‘the meeting's over and she grabs him by the arm and lifts him up'," he said.

NYU's Beckman told Reuters any NYU staff accompanying Chen "were people who provided help to an individual who is blind, is unable to speak English, and was new to the U.S.; it seems very ungracious for their efforts on Mr. Chen's behalf to be tarnished in this way".

"The reality is that he's held many press conferences and interviews, attended congressional hearings, and is writing a book about his life, and all NYU has ever done has provided staff and support to facilitate his activities, wishes, schedule, and family," he said in the email.

"FANTASY"

Matt Dorf, a communications strategist who was hired by NYU to advise Chen in his first couple of months in the United States, said Chen himself made the decisions on who he would meet.

"If the congressman or others felt they did not have proper access to Chen Guangcheng it was because Chen Guangcheng had made a decision not to speak with them because he was controlling all of the meetings in his whole schedule," he said in reference to the period from May through July last year.

He also said that the only people he ever saw taking notes in meetings were Chen's wife and a translator.

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A spokeswoman for Chen said he was not currently giving interviews. His eldest brother, Chen Guangfu, told Reuters that Chen told him that "at this stage, he can't comment on certain matters and that's why he's not answering the requests from many media organizations. He didn't say why."

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China's state-run Global Times, run by the Communist Party's official People's Daily, said Chen was living in a "fantasy" and should realize he had outstayed his welcome.

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"Chen's lack of academic qualifications and language competence meant he could not stay long-term. His embarrassing situation mirrors the fate of many Chinese 'pro-democratic activists' in the 1980s," the newspaper said in an editorial on Thursday.

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The 60-year-old Smith, who has represented his central New Jersey district for 32 years, said he started working on human rights issues in 1982, focusing on Soviet Jewish refuseniks.

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"Everything is about control," Smith said of dealing with NYU representatives when trying to arrange meetings with Chen. "It was that way throughout the whole process."

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During another recent chat with Chen, Smith said, "I had two people there and they had note pads. I asked 'who are you reporting to?' and they wouldn't tell me."

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"I don't find that friendly. I find that dangerous, in terms of Chen."

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Smith, chairman of the House of Representatives subcommittee that monitors global human rights, said he has been able to talk to Chen by telephone, through a translator, with relative ease.

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But Smith said he has had trouble meeting Chen in person as many as a dozen times, beginning with Chen's arrival at Newark Airport in May 2012 and "every trip I made up there" to NYU.

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Dorf denied that Smith had difficulty gaining access to Chen when the Chinese dissident arrived at NYU after flying into the United States, saying it was the first meeting that Chen had, it lasted about half an hour, and the lawmaker's staff took photographs of them together.

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Smith sees the situation differently: "There was this control the likes of which made me say 'Oh my God. What is going on here?'."

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(Additional reporting by Jonathan Allen in New York, and Ben Blanchard and Sui-Lee Wee in Beijing; Editing by Martin Howell)

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Special Report: How Syria's Islamists govern with guile and guns

The Syrian boys looked edgy and awkward. Three months ago their town, the eastern desert city of Raqqa, had fallen to rebel fighters trying to overthrow President Bashar al-Assad's government. Now the four boys - clad in tight jeans and bright T-shirts - were whitewashing a wall to prepare it for revolutionary graffiti.

"We'll make this painting about the role of children in the revolution," one of the boys told two journalists.

 

A white Mitsubishi pulled up and a man in camouflage trousers and a black balaclava jumped out and demanded that the journalists identify themselves. He was from the Islamic State of Iraq, he said, the Iraqi wing of al Qaeda linked to an Islamist group fighting in Syria called Jabhat al-Nusra.

The boys kept quiet until the man pulled away, and then started talking about how life has changed in the city of around 250,000 people since the Islamists planted their flag at the former governor's nearby offices.

"They want an Islamic state, but most of us want a civilian state," the boy said. "We're afraid they're going to try to rule by force."

As he finished his sentence, the same white car roared back round the corner. This time two men, both in balaclavas and holding Kalashnikov assault rifles, stepped out.

"Painting is forbidden here," one fighter said. The graffiti was too close to the group's headquarters. One of the boys made a brief, almost inaudible protest.

"We're sorry," the fighter said. "But painting is forbidden." His comrade stroked his long beard and said: "We are not terrorists. Don't be afraid of us. Bashar is the terrorist."

The encounter captures an important shift underway in rebel-held Syria. Using a mix of intimidation and organization, alliances of Islamist brigades are filling the vacuum in areas where Assad's army has withdrawn and more secular rebels have failed to provide order, a 10-day visit to rebel-held Syria by Reuters journalists showed.

The Islamist groups include al Qaeda affiliates and more moderate partners, so the nature of their rule is complex. They administer utilities, run bakeries and, in a town near Raqqa, operate a hydroelectric dam. They are also setting up courts and imposing punishments on those judged transgressors.

The United States and other Western powers support the Syrian National Coalition, a group of opposition figures based in Cairo. But the coalition has very little influence on the ground in Syria, so locals are increasingly turning to the Islamists as their best alternative to chaos.

"WE DRESS NORMALLY"

Islamist groups such as Jabhat al-Nusra and Ahrar al-Sham aim to create an Islamic mini-state in rebel-held territory, and Jabhat al-Nusra ultimately envisions a wider Islamic caliphate.

U.S. and European security officials say Jabhat al-Nusra is being financed by wealthy families from Saudi Arabia and Qatar. Syrian Islamist rebels say foreign fighters bring in money and that Syrian expats and Gulf-based individuals who want to overthrow Assad are helping them. Members of Ahrar al-Sham, which has fewer foreign fighters than Jabhat al-Nusra, told Reuters that they make money through business ventures and by taking over banks.

So far the Islamists have won sympathy from many residents in Raqqa - including those who oppose their vision of a narrow moral code and an Islamic caliphate - with their apparent restraint.

Billboards put up by Jabhat al-Nusra show a figure in full veil and tell women "you are like a pearl in your chastity." Yet unveiled women can still walk openly on Raqqa's streets and one resident said he had no problem getting whiskey, as long as he drank it in private.

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One evening in June, residents held an exhibit of homemade crafts to raise money for poor families. Men and women mingled as music played over a stereo system.

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Reema Ajaji, a veiled women who helped organize the event, said the media had unfairly maligned Jabhat al-Nusra. "They're called terrorists, and we don't accept this," she said. "They're our sons. Us and them, we're one thing. They defend us, and we defend them."

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She waved around the room, indicating the women in brightly colored headscarves and dresses, some unveiled. "We dress as we want. Do you see these girls?" she said. "Everyone is free to choose." If Jabhat al-Nusra had wanted to impose their law on people, they would have shut down the exhibition, Ajaji said.

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Other residents pointed to the university, which shut for about a month after rebels took the city but is now operating more or less normally. Inside the gated campus, young men and women chatted in the hallways and shared meals in the packed cafeteria. Armed groups are not allowed to enter.

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Ahmed Jaber, a 22-year-old chemistry student and member of the student union, said some 80 percent of students were attending classes and exams were going ahead. Life in Raqqa had improved over the past few months, he said, although there were disputes between Islamist brigades and more secular units.

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"It's in everyone's interests to resolve these differences," Jaber said. After the rebels took Raqqa, some residents held protests to demand a civilian state. Others, siding with Jabhat al-Nusra, called for an Islamic government. But since then, they have agreed to hold protests calling only for Assad's downfall.

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"After the hell of the regime, we consider this an excellent situation," Jaber said. "Yes, there's a security vacuum, there's chaos, and sometimes there are disputes. But it's much better than before."

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Selwa al-Janabe, a veiled 27-year-old student, said the Islamists' ideology was beside the point - at least for now.

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"I'm worried about something bigger than hijab or niqab," she said, referring to the Islamic headscarf and the fuller veil, which covers the face. The important thing now, Janabe said, was "liberation and freedom. Real freedom."

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Mohammed Shaib, a 26-year-old member of a secular activist group, said he was skeptical of the Islamists but saw no alternative for now. "Right now we're working under the principle that the enemy of my enemy is my friend," he said.

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"WE HAVE OTHER GOALS"

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Ask anyone in Raqqa who runs the town, and they'll usually tell you it's Ahrar al-Sham, an umbrella group of conservative Islamist factions which has taken the most active interest among fighting groups in the problems of civilian administration.

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The group, which works closely with Jabhat al-Nusra, has taken to calling itself a "haraka," or "movement," rather than a "liwa," or "brigade." The point, members say, is to make clear the struggle for Syria is not just about waging war.

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"From the very beginning we wanted to create justice and security, things like distributing bread. This was a founding idea," said Abu Muhammed al-Husseini, the 30-year-old head of Ahrar al-Sham's political office in Raqqa.

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The group helps provide electricity and water and its fighters secure grain silos, while others ensure that supply chains, from wheat fields to bakeries, function smoothly.

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Much of the town still works as it did before the area was taken by rebels, Husseini said. "There are some groups that only care about fighting, we have other goals," he said. They include making sure services are provided "side by side with the armed campaign against Bashar."

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He said Ahrar al-Sham had no major disagreements with Jabhat al-Nusra, who differed with them more on "operational details." He declined to discuss what the future government of Syria might look like, but said Islam "has a vision for building a society."

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Of all the public services the rebels have set up, the Sharia Authorities, which function as a rudimentary justice system, are the most central. They help provide essential services and are the closest thing rebel-held areas have to a government.

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The authorities are generally staffed by older men from the area. Community leaders hold discussions and appoint members from their own ranks, some members said. Each of the area's largest fighting brigades sends representatives, who often work as civilians at the body. Islamist brigades tend to be represented much more heavily than secular groups, both because of their relative size and prowess and because they were among the first to get involved in setting them up.

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For many Westerners, the term "sharia" can carry connotations of oppressed minorities, curtailed women's rights, and punishments like stoning, lashing and beheading. But for Syrians in the conservative Sunni regions that rebels control, the perception is very different.

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In part, rebel-run courts have been successful because much of what they deal with is mundane. They handle financial disputes, provide forms of property registration and, in some cases, licenses for exporting and importing goods to and from rebel-controlled territory.

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Even with serious crimes, most courts are not imposing harsh punishments because of a provision in Islamic law that such penalties can be suspended or lightened during wartime. Almost all cases are resolved by the payment of a fine to the victim or by a light jail sentence.

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A Sharia Authority member in Raqqa who called himself Abu Omar stressed that the body did its best to be fair; it was not strictly Islamist and it worked regularly with non-Islamic groups. He flipped through a file of resumes of applicants for the emerging police force, noting they were nearly all university graduates, and said a Christian headed its wheat bureau. "We benefit from debate with all groups," he said.

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Nevertheless, the influence of Islamists on the courts is unmistakable.

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ORDER OUT OF CHAOS

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In Salqin, a town in the northwestern Idlib province, Samer Raji is deputy head of the police. He said the main local rebel brigades, apart from Jabhat al-Nusra, sent officers to staff the police force of 30 men; but he added that the police sometimes called on the Islamist group as a "last resort" to enforce their rulings.

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"One call from the emir of Jabhat al-Nusra to the commander of a brigade with a wanted man and he'll show up at court." He pointed to an unresolved case of a van being stolen, saying that Jabhat al-Nusra could be called on to get it back.

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Members of the rebel-run authorities say the brigades are accountable to them, but fighters have sometimes taken the law into their own hands and their punishments can be severe.

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In Aleppo on June 10, Islamic State of Iraq fighters executed a 15-year-old boy in front of his parents for making a comment they regarded as heretical, said the Syrian Observatory for Human Rights, an anti-Assad monitoring group. The Observatory quoted witnesses as saying gunmen whipped the boy, Mohammad Qataa, then brought him to a wooden stand and shot him in the face and neck.

_13">

"Whoever curses even once will be punished like this," witnesses quoted an Islamic State of Iraq member as saying, according to the Observatory report.

_14">

The Islamist influence is notably strong in rebel-held areas of Aleppo. Jabhat al-Nusra has set up in the old children's hospital there, hanging a black flag bearing the Islamic declaration of faith in white calligraphy: "There is no god but God and Mohammad is His prophet."

_15">

The local Sharia Authority, which Aleppans simply call "the Authority," is housed in the old national hospital next door. One sign outside warns that unveiled women will not be allowed to enter.

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Inside, men and women shuffled through dark, cramped corridors, clutching papers. Abu Baraa, a 22-year-old fighter from Ahrar al-Sham who now works to register the names of prison inmates, told Reuters the court "doesn't have limits," and could arrest anyone who does something wrong. Such decisions are up to an executive body composed of members from each of the area's four main brigades, including Jabhat al-Nusra.

_1">

Abu Baraa said the authority worked to the tenets of ultraconservative Islam and, while it had so far refrained from most harsh punishments, he hoped it would become stricter after the war. In some cases, people had been sentenced to lashings, he said, and three men were imprisoned for a couple days after they were caught drinking.

_2">

Asked about rape cases, he said he could only think of one, which was unresolved. The man was denying it, and so the court was investigating, asking about the woman's reputation.

_3">

"If she is a good person, the girl, she wouldn't accept to get laid with someone strange," he said in English.

_4">

What goes on in this building, and the ambitions of people such as Abu Baraa running this nascent government, show what the future in rebel-controlled regions in Syria might look like.

_5">

Aleppo's authority had started with around a dozen people who "wanted to do justice," Abu Baraa said. Now it has about a dozen branches in the city and several more across Aleppo province. Eventually, Abu Baraa said, he hopes it will become the state.

_6">

"There has to be someone in charge," he said. "We all were from Ahrar al-Sham. And then the other brigades joined us, and we were bigger and bigger. That's how things work. You start small and get bigger and bigger."

_7">

(This Special Report is the second in a three-part series. The first part may be accessed here reut.rs/1as0KmH)

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(Additional reporting by Mark Hosenball in Washington; Editing by Richard Woods and Simon Robinson)

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Pirate Bay founder sentenced to 2 years in Sweden hacking case

A co-founder of file-sharing website Pirate Bay was sentenced to two years in jail on Thursday for hacking into computers at a company that manages data for Swedish authorities and making illegal online money transfers, a court said.

Gottfrid Svartholm Warg was extradited to Sweden last year from Cambodia to begin a one-year jail sentence after being convicted in 2009 of internet piracy. He was then charged by authorities as part of the separate hacking investigation.

 

"The hacking has been very extensive and technically advanced," the Nacka district court said in a statement. "The attacker has affected very sensitive systems."

He had denied the charges.

Prosecution documents say Warg, a 28-year-old Swede, managed to transfer 24,200 Danish crowns ($4,300) online, but also attempted, in several different transactions, to transfer a total of around 683,000 euros ($915,500).

The investigation was into data infringement involving outsourcing firm Logica.

Swedish authorities have said the hackers gained access to information on several people with protected identities.

In the 2009 trial, a court in Sweden - where The Pirate Bay was founded in 2003 - fined and sentenced to jail Warg and two co-founders then behind the site for breaching copyright in a case brought by firms including Sony Universal Music and EMI.

Swedish prosecutors in May launched a new attempt to close down Pirate Bay, which provides links to music and movie files stored on other users' computers.

The site is now run by an unknown group and uses a domain name registered in Sint Maarten, a Dutch territory in the Caribbean.

($1 = 5.5648 Danish crowns) ($1 = 0.7461 euros)

(Editing by Alistair Scrutton and Patrick Lannin)

Afghan peace bid stumbles on Kabul-Taliban protocol row

A fresh effort to end Afghanistan's 12-year-old war was in limbo on Thursday after a diplomatic spat about the Taliban's new Qatar office delayed preliminary discussions between the United States and the Islamist insurgents.

A meeting between U.S. officials and representatives of the Taliban had been set for Thursday in Qatar but Afghan government anger at the fanfare surrounding the opening of a Taliban office in the Gulf state threw preparations into confusion.

The squabble may set the tone for what could be arduous negotiations to end a conflict that has torn at Afghanistan's stability since the U.S. invasion following the September 11, 2001 al Qaeda attacks on U.S. targets.

 

Asked when the talks would now take place, a source in Doha said, "There is nothing scheduled that I am aware of."

But the U.S. government said it was confident the U.S.-Taliban talks would soon go forward.

"We anticipate these talks happening in the coming days," said State Department spokesman Jen Psaki, adding that she could not be more specific. James Dobbins, the U.S. special representative for Afghanistan and Pakistan "is packed and ready to go with his passport and suitcase," she said.

One logistical complication is a visit by U.S. Secretary of State John Kerry to Doha on Saturday and Sunday.

Kerry will discuss the Afghan peace talks with the Qatari hosts, senior U.S. officials said, but does not plan to get immersed in any talks himself or meet with Taliban representatives. A major part of his meeting will be devoted to talks on the Syrian civil war.

The opening of the Taliban office was a practical step paving the way for peace talks. But the official-looking protocol surrounding the event raised angry protests in Kabul that the office would develop into a Taliban government-in-exile. A diplomatic scramble ensued to allay the concerns.

Kerry spoke with Afghan President Hamid Karzai on Tuesday and again on Wednesday in an effort to defuse the controversy.

NATO chief Anders Fogh Rasmussen appeared to side with Karzai by pointing out that alliance leaders at NATO's Chicago summit last year had made clear that the peace process in Afghanistan must be "Afghan-led and Afghan-owned".

"Reconciliation is never an easy process in any part of the world," Rasmussen told reporters in Brussels.

A Taliban flag that had been hoisted at the Taliban office in Qatar on Tuesday had been taken down and lay on the ground on Thursday, although it appeared still attached to a flagpole.

A name plate, inscribed "Political Office of the Islamic Emirate of Afghanistan" had been removed from the outside of the building. But a similar plaque fixed onto a wall inside the building was still there on Thursday morning, witnesses said.

Asked whether the Taliban office had created any optimism about peace efforts, the source replied: "Optimism and pessimism are irrelevant. The most important thing is that we now know the Taliban are ready to talk, and sometimes talk is expensive."

Word of the U.S.-Taliban talks had raised hopes that Karzai's government and the Taliban might enter their first-ever direct negotiations on Afghanistan's future, with Washington acting as a broker and Pakistan as a major outside player.

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Waging an insurgency to overthrow Karzai's government and oust foreign troops, the Taliban has until now refused talks with Kabul, calling Karzai and his government puppets of the West. But a senior Afghan official said earlier the Taliban was now willing to consider talks with the government.

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"It's hard to talk and fight at the same time," said Marc Grossman, Dobbins' predecessor as the U.S. envoy for Afghanistan and Pakistan.

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The talks will be "really" difficult, said Grossman, now vice chairman at The Cohen Group consulting firm. He added that he was heartened that the protocol dispute, which he called "the first bump" in the process, was being worked out.

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PRISONER SWAP

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Pakistan's powerful military played a central role in convincing the Taliban to hold talks with Washington, U.S. and Pakistani officials said, a shift from widely held U.S. and Afghan views that it was obstructing peace in the region.

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A prisoner swap is seen as likely to happen as the first confidence-building measure between the two sides, said one Pakistani official, who declined to be named.

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But he said there were many likely spoilers in the peace process who would want to maintain the status quo to continue to benefit from the war economy and the present chaotic conditions.

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"The opening of a Taliban office and the American readiness to hold talks with the Taliban is a forward movement. What happens next depends on the quality of dialogue and political will of the interlocutors," he said.

_8">

Pakistan has been particularly critical of Karzai, seeing him as an obstacle to a peace settlement.

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In its talks with the U.S. officials, the Taliban was expected to seek the return of former commanders now held at the Guantanamo Bay military prison in Cuba, as well as the departure of all foreign troops.

_10">

The United States wants the return of the only known U.S. prisoner of war from the conflict, Sergeant Bowe Bergdahl, who is believed to be held by the Taliban.

_11">

Psaki, the State Department spokeswoman, reiterated Washington's desire to free Bergdahl and acknowledged that the Taliban are likely to raise their detainees at Guantanamo early in any talks.

_12">

"The exchange of detainees is something the Taliban has raised in the past and we certainly expect they will raise it," she said. "We are open to discussing this issue as part of the negotiations."

_13">

U.S. President Barack Obama cannot transfer the Taliban detainees from Guantanamo without a written notification to the U.S. Congress, where some lawmakers vigorously oppose that move.

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The Doha protocol dispute burst into the open on Wednesday when Karzai said his government would not join U.S. talks with the Taliban and would halt negotiations with Washington on a post-2014 troop pact.

_15">

Officials from Karzai's government, angered by the official-sounding name the Taliban chose for its political office in Doha, said the United States had violated assurances it would not give official status to the insurgents.

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A statement on Qatar's foreign ministry website late on Wednesday said that the office was called the "Political Bureau for Afghan Taliban in Doha".

_1">

The source familiar with the matter said: "The Taliban have to understand that this office isn't an embassy and they are not representing a country."

_2">

(Additional reporting by Yara Bayoumy in Dubai, Adrian Croft in Brussels, Lesley Wroughton and Warren Strobel in Washington, and Frank Jack Daniel, Mahreen Zahra-Malik and Matthew Green in Islamabad; Writing by William Maclean; Editing by Philippa Fletcher, Paul Simao and Jim Loney)

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New Palestinian prime minister offers resignation

Palestinian Prime Minister Rami Hamdallah has offered his resignation to President Mahmoud Abbas just two weeks after taking office, an official in his press office told Reuters on Thursday.

It was not immediately clear whether Abbas would accept the resignation by Hamdallah, an academic and political independent whose cabinet convened for the first time last week.

 

The official told Reuters Hamdallah made the abrupt, unexpected move because of a "dispute over his powers".

A note on Hamdallah's Facebook page said his decision came after "outside interferences in his powers and duties".

His cabinet consists overwhelmingly of members of the Fatah faction led by Abbas and political commentators had immediately questioned how much leeway he would have to maneuver.

Hamdallah's predecessor, American-educated economist Salam Fayyad, resigned in April after six years in power defined by tough economic challenges and rivalries with Fatah politicians eager to control the levers of power.

Abbas chose Hamdallah while considering that Western countries who help keep the struggling West Bank government afloat with aid money were keen to see clean hands at the helm.

Corruption allegations have dogged Fatah and Palestinian government officials for years, and a successor who would meet donors' expectations would be difficult to find.

AWKWARD TIMING

The timing is especially awkward, coming a week before Abbas is set to meet United States Secretary of State John Kerry as part of an American bid to revive stalled Israeli-Palestinian peace talks.

Foreign dignitaries had been streaming into Ramallah, the Palestinians' de facto capital in the Israeli-occupied West Bank, to meet the newly-minted prime minister and to back the peace drive.

In a meeting on Wednesday, European Union foreign policy chief Catherine Ashton told Hamdallah: "It has been my privilege to work with your predecessor and I am very much looking forward to working with you and as I said, I wish you every success."

Since a brief civil war in 2007 between the Western-backed secular Fatah party and the Islamist group Hamas, Palestinians have had no functioning parliament or national elections.

Abbas exercises limited self-rule in the Israeli-occupied West Bank while Hamas, which won 2006 legislative polls, has its own administration and prime minister in the Gaza Strip.

Attempts to cement a unity pact between the two parties have failed to take hold and ordinary Palestinians, enduring mounting living costs and unemployment, have grown disenchanted with bickering politicians.

Hamas spokesman Fawzi Barhoum said in a statement: "Hamdallah's resignation indicates that unilateral steps remain weak, are useless and do not resolve the internal Palestinian problem ... The solution is not in having many governments. It is in the implementing the reconciliation agreement."

(Additional reporting by Hamoudeh Hassan, Ali Sawafta and Nidal al-Mughrabi; editing by Andrew Roche)

Lake Powell accident

Lake Powell accident, A Utah man driving a motorboat on Lake Powell was apparently distracted by his young passengers when he hit a houseboat and flipped the craft, leaving his wife dead and his daughter and his son's girlfriend missing, deputies said.
Adrian Jackman, 59, of South Jordan, apparently tried to swerve when he noticed the moving houseboat but hit the front corner, authorities said.
The accident about 8 a.m. Thursday killed his wife, Marilyn Jackman, 57. His daughter, Jessica Jackman, 22, and his son's girlfriend, Valerie Rae Bradshaw, 29, of Sandy, Utah, are missing in the water.
Crews brought a robot equipped with a camera to search for the missing women Friday in the 400-foot-deep water near Dangling Rope Marina. But they ran into technical problems and had to call off the effort, according to Denise Shultz, spokeswoman for the Glen Canyon National Recreation Area that encompasses Lake Powell.
She said the Utah Highway Patrol has been asked to bring in equipment from the Salt Lake City area, and the search is expected to resume Saturday.
Most of the people aboard the motorboat, which was carrying 13 passengers, were family members from northern Utah, deputies said. Nobody on the houseboat was injured.
It's not uncommon for boaters to venture out early in the morning while the waters of Lake Powell are smooth, said Kane County sheriff's Sgt. Alan Alldredge. The vast man-made lake, bordered by sandstone walls and colorful rock formations, is a popular destination for houseboat vacations.
Deputies said the group was headed to Rainbow Bridge — touted as the largest known natural bridge in the world — when the crash happened. Crews had to rescue some victims from the water, Shultz said.
All of the six children aboard were wearing life jackets, officials said. Adrian Jackman and his 11-year-old granddaughter were airlifted to a hospital in Flagstaff, Ariz., while a third person was taken to the hospital by ambulance.
The three were released later Thursday.

U.S. group that 'converted' gays closes its doors and apologizes

A Christian group that once promoted therapy to encourage gays and lesbians to overcome their sexual preferences has closed its doors and apologized to homosexuals, acknowledging its mission had been hurtful and ignorant.

Exodus International billed itself as the oldest and largest Christian ministry dealing with faith and homosexuality, operating since 1976. It announced it would cease operations in a statement on its website on Wednesday.

 

The Irvine, California-based group's board unanimously voted to close Exodus International and begin a separate ministry, the statement said.

"I am sorry for the pain and hurt that many of you have experienced," President Alan Chambers said in a statement. "I am sorry some of you spent years working through the shame and guilt when your attractions didn't change. I am sorry we promoted sexual orientation change efforts and reparative theories about sexual orientation that stigmatized parents."

Chambers said he was part of a "system of ignorance."

Exodus International has closed at a time of shifting attitudes in the United States, with public opinion polls now tilting in favor of same-sex marriage.

Twelve states and the District of Columbia have legalized same-sex marriage, with six doing so since last fall. The U.S. Supreme Court is expected to rule by the end of June on a challenge to the Defense of Marriage Act, a 1996 law that restricted federal recognition of marriage to heterosexual couples, as well as a challenge to a 2008 California referendum that banned same-sex marriage in that state.

Ross Murray, a spokesman for gay rights group GLAAD, called the closing of Exodus International a step in the right direction and welcomed Chambers' move away from "divisive and demonizing rhetoric."

"But it's going to take a long time for healing to come, especially for the people who have gone through Chambers' program and have suffered because of it," Murray said.

Exodus International's mission statement was "mobilizing the body of Christ to minister grace and truth to a world impacted by homosexuality."

The group appeared to have changed its views incrementally, culminating with the announcement of its closure at the group's 38th annual conference on Wednesday. A television program scheduled to run on the Oprah Winfrey Network on Thursday will show Chambers meeting with people who said they were harmed by his therapy.

Last year Exodus International issued a statement complaining that the media wrongly characterized its methods as "conversion therapy." Instead, it said, it provided support to people seeking help in overcoming their same-sex attraction, through prayer and using the Bible as a guide.

The group also issued statements opposing violence against gays and lesbians and against laws criminalizing homosexuality. It said it opposed some methods of conversion, such as exorcism or "holding/touching therapy," in which the therapist would take a male client into his lap, hold him gently, and repeat affirming words in order to recreate the father-son bond.

California last year became the first U.S. state to ban such therapy for minors.

New Jersey's legislature was due to vote next week on a bill that would ban licensed therapists from performing gay-to-straight counseling for minors. Governor Chris Christie, who at first would not take a stand on the issue, has since indicated his opposition to the practice, raising expectations the bill will be signed into law.

(Additional reporting by Francesa Trianni and Victoria Cavaliere; Editing by Lisa Von Ahn)

France, Spain take action against Google on privacy

France and Spain led a Europe-wide push on Thursday to get U.S. Internet giant Google to change its policies on collecting user data.

News that the U.S. National Security Agency under the Prism surveillance program secretly gathered user data from nine U.S. companies, including Google, to track people's movements and contacts makes the timing especially sensitive for Google.

France's data protection watchdog (CNIL) said Google had broken French law and gave it three months to change its privacy policies or risk a fine of up to 150,000 euros ($200,000).

 

Spain's Data Protection Agency (AEPD) told Google it would be fined between 40,000 euros and 300,000 euros for each of the five violations of the law, that it had failed to be clear about what it did with data, may be processing a "disproportionate" amount and holding onto it for an "undetermined or unjustified" period of time.

The CNIL, which has been leading Europe's inquiry since Google launched its consolidated privacy policy in March 2012, said Britain, Germany, Italy and the Netherlands would be taking similar action against the world's No. 1 search engine.

Google could face fines totaling several million euros.

"By the end of July, all the authorities within the (EU data protection) task force will have taken coercive action against Google," said CNIL President Isabelle Falque-Pierrotin.

Last year, Google consolidated its 60 privacy policies into one and started combining data collected on individual users across its services, including YouTube, Gmail and social network Google+. It gave users no means to opt out.

National data protection regulators in Europe began a joint inquiry as a result. They gave Google until February to propose changes but it did not make any. Google had several meetings with the watchdogs and argued that combining its policies made it easier for users to understand.

The CNIL's move is seen by legal experts and policymakers as a test of Europe's ability to influence the behavior of international Internet companies.

Britain is still considering whether its law has been broken and will write to Google soon with its findings, the CNIL said.

And Google is due to answer allegations on the issue in a German court hearing late next week, a spokesman for the country's data protection regulator said.

Google said it would continue to work with the authorities in France and elsewhere.

"Our privacy policy respects European law and allows us to create simpler, more effective services. We have engaged fully with the authorities involved throughout this process, and we'll continue to do so going forward," a spokesman said by email.

Doctors spent 40 minutes trying to revive 'Sopranos' star Gandolfini

Doctors at a Rome hospital battled for 40 minutes to try to save the life of James Gandolfini, best known for his Emmy-winning role as a mob boss in the TV series "The Sopranos," before pronouncing him dead, the emergency room chief said on Thursday.

Gandolfini, 51, whose performance as Tony Soprano made him a household name and help usher in a new era of American television drama, was vacationing in Rome and had been scheduled to attend the closing of the Taormina Film Festival in Sicily on Saturday.

 

He was taken from his Rome hotel to the city's Umberto I hospital late on Wednesday, according to a hospital spokesperson.

The actor's 13-year-old son, Michael, had found him collapsed in the bathroom of his Rome hotel room, Gandolfini's manager, Mark Armstrong, said in an email.

"The resuscitation maneuvers, including heart massage, etc., continued for 40 minutes and then, seeing no electric activity from the heart, this was interrupted and we declared James dead," Claudio Modini, the emergency room chief, told Reuters.

"The patient was considered dead on arrival, and for that reason an autopsy has been requested to be carried out by a pathologist, as is normal procedure in our country."

The autopsy has been scheduled for Friday morning.

Since "The Sopranos" ended its six-season run in June 2007, Gandolfini appeared in a number of big-screen roles, including the crime drama "Killing Them Softly" and "Zero Dark Thirty," a film about the hunt for Osama bin Laden.

Academy Award winner Kathryn Bigelow, who directed Gandolfini in the film, said she was devastated by the news of his death.

"James was such an enormous talent, and an even greater spirit. I will be forever grateful for the privilege of working with him, and shall cherish his memories always," she said in a statement.

At the time of his death, Gandolfini had been working on an upcoming HBO series, "Criminal Justice," and had two motion pictures due out next year

Actress Edie Falco, who played Tony Soprano's long-suffering wife, Carmela, in "The Sopranos," said her co-star was a man of "tremendous depth and sensitivity."

"I consider myself very lucky to have spent 10 years as his close colleague," she said.

Apart from Michael, his son with his first wife whom he divorced in 2002, Gandolfini is survived by wife, Deborah Lin, a model he married in 2008, and baby daughter Liliana, born last year.

ROLE TOOK ITS TOLL

Gandolfini gained sudden fame after years toiling as a character actor and garnered widespread respect from fellow actors.

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Brad Pitt, who appeared in three films with Gandolfini, called him "a ferocious actor" and said he was "gutted by this loss."

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In the HBO series, the burly, physically imposing Gandolfini created a gangster different from any previously seen in American television or film.

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He was capable of killing enemies with his own hands but was prone to panic attacks. He loved his wife and was a doting father, but he carried on a string of affairs.

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He regularly saw a therapist, portrayed by Lorraine Bracco, to work out his anxiety problems and issues with his mother. The vulnerable side of Tony Soprano made his detestable character deeply likable.

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By the start of the show's final season, Gandolfini suggested he was ready to move on to more gentle roles.

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"I'm too tired to be a tough guy or any of that stuff anymore," he said. "We pretty much used all that up in this show."

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"The Sopranos" cast was also known for its hard-partying ways off set, and Falco, who has worked to stay sober since the early 1990s, confessed in a 2007 interview with New York magazine that hanging out with the cast was "too dangerous."

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In 2002, a representative for Gandolfini confirmed to the New York Daily News and other media organizations that Gandolfini had struggled in the past with substance abuse problems, a revelation that first surfaced in connection with a contentious divorce battle with his first wife, Marcy Wudarski.

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'HUMBLE, LOYAL, COMPLICATED'

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Gandolfini began his career as a stage actor in New York and earned a Tony nomination for his role in the original 2009 Broadway cast of the dark comedy "God of Carnage."

_10">

The actor, who was raised in a working-class family, shared Tony Soprano's Italian-American heritage and New Jersey roots. He was known for his reserved demeanor off-camera and generally shied away from publicity.

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"The Sopranos" earned Gandolfini three Emmy Awards as best lead actor in a drama series and was considered by many critics the finest drama to have aired on U.S. television.

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The series was a major factor in establishing HBO, a pay-cable network once focused on presentations of feature films, as a powerhouse of original dramatic television and in shifting the kind of sophisticated storytelling once reserved for the big screen to TV.

_13">

His role paved the way for other popular prime-time shows built around profoundly flawed characters and anti-heroes, from "Dexter" and "Breaking Bad" to "Mad Men" and "Nurse Jackie."

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Script writer Steve Zaillian, who worked with the actor before and after "The Sopranos," said he had always been the same man.

_15">

"A real man, like they don't make anymore. Honest, humble, loyal, complicated, as grateful for his success as he was unaffected by it, as respectful as he was respected, as generous as he was gifted. He was big, but even bigger-hearted," he said.

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Gandolfini is due to appear on the big screen next year, playing the love interest of comic actress Julia Louis-Dreyfus in the film "Enough Said." He also has a role in the upcoming New York crime drama, "Animal Rescue."

_1">

Both are set for U.S. release by News Corp-owned studio Fox Searchlight.

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(Additional reporting by Piya Sinha-Roy in Los Angeles; Writing by Steve Scherer and Patricia Reaney; Editing by Mary Milliken and Peter Cooney)

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Wall St. plunges, S&P posts biggest drop since Nov 2011

Stocks fell more than 2 percent on Thursday, extending the previous day's sharp decline as investors fretted over the Federal Reserve's plan to begin reducing its stimulus later this year if the economy strengthens.

The S&P 500 recorded its biggest daily decline since November 11, 2011, on the year's heaviest day of trading. All 10 S&P sectors were sharply lower, with 94 percent of stocks traded on the New York Stock Exchange down for the day and more than four-fifths of Nasdaq-listed shares ending lower.

 

The Dow Jones industrial average dived 353.87 points, or 2.34 percent, at 14,758.32. The Standard & Poor's 500 Index was down 40.74 points, or 2.50 percent, at 1,588.19. The Nasdaq Composite Index dropped 78.57 points, or 2.28 percent, at 3,364.64.

The Fed's program of bond-buying has fueled stock market gains this year, sending indexes to a series of all-time highs. A trend emerged of investors buying on market dips and limiting stocks' decline.

David Joy, chief market strategist at Ameriprise Financial in Boston, said it wasn't clear that pattern would continue.

"There's money leaving the market from people who were convinced that the rally has been mostly attributable to the Fed, and the rise on the 10-year yield is a concern since it happened so quickly," he said. "It's too early to say whether this represents a buying opportunity or if the weakness will continue."

The S&P 500 index closed below its 50-day moving average for only its second time this year. An extended break below that level, a key technical measure of the recent trend in stocks, could add to selling pressure. It also closed under 1,600 for the first time since May 2.

About 9.29 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, above the daily average so far this year of about 6.36 billion shares.

Bernanke on Wednesday said the central bank's policy of buying $85 billion in bonds per month could start to wind down this year if the economy is strong enough and could finish in mid-2014.

"Remember that tapering would be a vote of confidence in the market, which would be good news," said Joy, who helps oversee $708 billion in assets. "And for the moment, the Fed is still very accommodative, with things remaining data-dependent. Those are signs that declines of this magnitude may not be justified."

Also adding to the market's concerns, China's interbank funding costs surged as the government ignored market pressure to inject funds into the market despite more evidence China's economy is slowing. Chinese stocks dropped 2.8 percent.

Among the U.S. sectors hit hard on Thursday were homebuilders, down 6.7 percent on concerns of higher borrowing rates. Data on Thursday showed sales of existing U.S. homes rose in May rose to a 3 1/2-year high.

Builder PulteGroup Inc fell 9.1 percent to $18.87 as the biggest decliner on the S&P 500, followed by D.R. Horton Inc, down 9 percent to $21.31.

The benchmark 10-year U.S. Treasury note fell 15/32, with the yield at 2.408 percent.

The S&P has fallen about 4 percent from its all-time closing high on May 21 of 1,669.16. Other markets around the world have also have fallen dramatically, with the MSCI's all-country world markets index dropping 3.7 percent, its largest single-day drop in 19 months.

Each of the 10 S&P industry sectors fell more than 1 percent with consumer staples leading the losses with a 3 percent drop. Kroger fell 6.1 percent to $32.98 after the company said its sales growth missed expectations in the first quarter.

_0">

Energy shares were also sharply weaker, dropping alongside a 2.9 percent slump in the price of crude oil.

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Walt Disney shares fell 3.7 percent to $61.98 after Goldman Sachs removed the stock from its "conviction buy" list.

_2">

Shares of Ebix Inc lost 44 percent to $11 a day after the insurance software provider said that it and an affiliate of Goldman Sachs would cancel their planned merger.

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Oracle Corp fell in extended trading after the company reported an increase in new software sales that was at the low end of its own forecasts.

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On the upside, GameStop Corp jumped 6.3 percent to $40.94 a day after Microsoft Corp said users of its forthcoming Xbox One game console will be able to lend or sell used disc-based games, a plus for GameStop's used games business.

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Jabil Circuit Inc rose 1.5 percent to $20.12 a day after announcing an unspecified number of job cuts as part of a restructuring plan.

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(Editing by Nick Zieminski and Kenneth Barry)

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Finding value when the market misbehaves

Traders are nervous as Wall Street waits for the Federal Reserve to reveal its next quantitative easing move. Last week marked the third week out of the last four in which major indexes turned negative.

What if you ignored the market's mood, though? Would it make a difference?

 

If you can find managers focused on buying and holding the best stocks - no matter how the rest of the market is behaving - you might reap higher gains over time.

C. Thomas Howard, professor emeritus at the University of Denver, has found that managers who invest in what he defines as the "best markets" for overall stock performance and the stocks that represent the "best ideas" will outperform market indexes. Howard identified hundreds of companies that fit his criteria and could have been bought at bargain prices.

Examining a period from April 2003 to March 2013, Howard found in a recent paper that his "best idea" group of 400 stocks, which includes Google, Ethan Allen Interiors and MasTec, gained almost 17 percent, compared with 9 percent for the Russell 3000 Index.

The "best market" group did even better: It was up 27 percent, versus 9 percent for the Russell 3000. Leading that pack are stocks in developed international markets and small U.S. companies.

The reason for such outperformance? Managers made "emotionally difficult" decisions to buy out-of-favor stocks, ignore short-term volatility and hold their picks through market swoons.

These managers generally run smaller funds like Invesco Endeavor A, which focuses on small- to mid-cap stocks and is up 33 percent for the past year through June 14, or Bridgeway Ultra Small Company, which focuses on companies with an average market cap of $225 million and has gained 50 percent during the same period.

But most investors can't stomach such a contrarian approach and gravitate toward older, brand-name funds that mimic the market and focus on bolstering assets.

"Perverse industry incentives and emotional investors combine to incent funds to invest in other than best idea stocks and so performance declines accordingly," Howard told me in an email. "Funds underperform not because of the lack of skill, but because of the incentives they face."

In other words, managers often feel compelled to own popular stocks in order to build fund assets, although it may not be the most profitable long-term strategy.

THE DEEP-VALUE STRATEGY

If some of this theory sounds familiar, it's because it echoes the work of contrarian, deep-value investors who specialize in identifying quality stocks they think the market has underpriced, then hold them for years.

Meir Statman, a professor of finance at Santa Clara University who read the Howard paper, sees a shortcoming of such behavioral stockpicking. The common error, he says, is a hindsight bias, when past results are used to extrapolate future returns.

Investors who choose deep-value managers, you'll need to stick with them, since value stocks go in and out of favor with market turns. These stockpickers don't always make money and may lag the market when others are gaining.

It's equally important to pay attention to the costs of contrarian stockpicking. Unless you choose a passive value fund that essentially buys an index, you may pay a relatively steep price for an actively managed value fund because of research and other expenses.

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The Third Avenue Value Fund, for example, charges 1.4 percent annually for management expenses. It's up 28 percent over the past year. Top holdings include Wheelcock & Co, Bank of New York Mellon and Toyota Industries.

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You may do better by buying an index fund like the SPDR S&P 400 Value fund, which is up 30 percent over the year. It costs only 0.20 percent annually.

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Deep-value representation in the form of a stock fund can balance out the conventional growth index offerings in your portfolio.

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You never know when value will be in favor. It follows waves that are considerably less predictable than the Fed's moves.

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(Editing by Lauren Young and Douglas Royalty)

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(This June 18 story was refiled to correct the name of Third Avenue Value Fund from Third Avenue Fund in the 16th paragraph.)

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State Street says global equities chief to leave

State Street Corp announced on Wednesday that global equities chief Alistair Lowe will leave the company by the end of the year as part of a shake-up in its asset management division.

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The move comes as State Street Global Advisors combines its cash and fixed income asset classes under Steve Meier. He will become chief investment officer of fixed income, currency and cash, Boston-based State Street said in a news release.

 

At the end of March, State Street had $2.18 trillion in assets under management. Most of that money is in passive investments, such as exchange-traded funds.

"We believe that the boundaries between fixed income disciplines are blurring and that a broad view is beneficial," said Rick Lacaille, SSgA's chief investment officer. "For instance, it is clear that cash management is moving away from a traditional money market framework and that optimal portfolio management now incorporates skills typically associated with managing longer dated fixed income securities."

(Reporting by Tim McLaughlin; Editing by Lisa Von Ahn and Kenneth Barry)

For wine investors, it's hard work to drink in success

When investing in wine, as opposed to drinking it, experts advise leaving your taste buds at the cellar door but keeping your eyes wide-open.

Wine is highly regulated, but the market it trades in is not, and the entry fee is not for the faint of heart.

"For proper investment in wine you really need to separate out your personal taste and your personal preference from investment purposes. These are two entirely different goals," said Jennifer Simonetti-Bryan, author most recently of "The One Minute Wine Master" and "Pairing with the Masters: A Definitive Guide to Food & Wine."

 

"Wine is completely emotional and that's what makes it very difficult as an asset class," said Simonetti-Bryan, who before attaining the top qualification of Master of Wine, worked as a financial analyst in London.

Collectible wine represents less than 1 percent of the entire world's annual wine production. The other 99 percent of this year's output will be up for tasting and sale at VinExpo, the industry's global trade show in Bordeaux that runs through Thursday.

But at least some of that top 1 percent, the classified growths of prized Bordeaux, have already been sampled, rated and priced.

Investors "can do extraordinarily well, but only if you know what you're doing," said Charles Curtis, the former head of wines in New York and Hong Kong for Christie's auction house, who now advises wine collectors and investors. (curtismw.com/).

Curtis, like Simonnetti-Bryan, is one of 300 people in the world to hold the coveted Master of Wine title,

"To be successful in investing in any alternative asset - wine, jewelry, art - you have to have a passion for what you collect," said Curtis, whose clients range from those with small collections to those with "five (million dollar) to $10 million cellars."

Timing is also crucial. For example, take the price of a case of 1982 Lafite, the premiere cru Bordeaux. Its cost rose to about $64,000 in May 2011, only to fall to less than $40,000 in January 2012.

"The '82s began to flood the market last year because they were 30 years old and they're peaking," said Jennifer Williams-Bulkeley, who worked in London and managed a portfolio in which the assets were mostly stocks and bonds.

She recently opened a Boston-based wine investment advisory service and applies a soup├žon of statistics and a pinch of analytics, combined with a knowledge of terroir to the investment portfolios of her wine clients. (www.wineassetmanagement.com)

"If you're properly managing your wine portfolio, you know when to sell it," said Williams-Bulkeley.

In addition to timing, wine must be stored correctly, shipped properly and have impeccable provenance to qualify as a viable investment.

Questions about provenance are behind a lawsuit filed against celebrity Chef Charlie Trotter. Two New York collectors sued in Chicago's federal court, accusing Trotter of selling them a big bogus bottle of 1945 Burgundy for more than $46,000.

Some auction houses have also been sued for selling suspect wines.

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Auctions generate most of the publicity, yet they represent a fairly small percentage of the roughly $4 billion fine wine market. So far this year, the auction houses of Acker, Merrall & Condit, Christie's, Hart Davis Hart, and Sotheby's have sold a little over $100 million worth of fine wine around the world.

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While this spring's auction season still has a couple of auctions left and final totals are not in, it looks as though sales will be lower than the first half of last year, when sales totaled about $160 million.

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If you still want to get started investing in wine, you'll need to open your wallet wide. Curtis pegged the minimum needed to begin investing seriously in wine at about $100,000. Williams-Bulkeley's managed accounts begin at $250,000.

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In the Europe and Asia, it is still possible for sophisticated investors to put money into wine funds for comparatively little - between $15,000 and $50,000. But the funds are not without risk. Some are suffering from liquidity problems and unrealistic valuations of their holdings.

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Last month, regulators in Luxembourg forced the wine fund Nobles Crus to suspend redemptions temporarily after the fund manager admitted it did not have enough cash on hand to meet redemption demands.

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(Reporting by Leslie Gevirtz. Editing by Lauren Young and Dan Grebler)

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